Foodpanda finds no takers even at $10M price tag

Rocket Internet-backed Foodpanda is desperately searching for a buyer for its troubled India operations at a lowly price tag of $10-15 million, multiple sources familiar with the development told TOI.Digbijay Mishra | TNN | January 28, 2016, 12:14 IST

Rocket Internet-backed Foodpanda is desperately searching for a buyer for its troubled India operations at a lowly price tag of $10-15 million, multiple sources familiar with the development told TOI.

The Samwer brothers-led Rocket Internet's interest in its Indian portfolio has been waning with most of its flagship firms, including FabFurnish and PrintVenue, being put on the block.

"Foodpanda has held talks with its competitors in India, who have been pitched with a sale value of $10-15 million," a source close to the development told TOI.

Despite the low valuation, the food ordering platform has not found a buyer yet, signalling that it may decide to shut India operations soon.

"Both Zomato and Swiggy have been approached for a buyout, besides one larger horizontal company. But Rocket is yet to garner keen interest from possible suitors for Foodpanda," another source said.

Zomato's founder and CEO Deepinder Goyal did not respond to calls by TOI while Swiggy's co-founder Nandan Reddy refused to comment. When contacted, a spokesperson of Rocket Internet told TOI in an email, "We don't comment from Rocket's side to rumours about Foodpanda."

Last year, Foodpanda raised more than $300 million from the Berlin-based Samwer brothers and Goldman Sachs for its global business. That's when it invested heavily in the Indian market, becoming one of the largest players in the online food ordering segment. In order to ward off rivals Zomato and the likes of Swiggy and TinyOwl, Foodpanda acquired TastyKhana and Just Eat in India. But it has since been on a downhill slide.

Reports of an alleged fraud and systematic discrepancies in Foodpanda's operations emerged last year. The company then laid off 300 people as the overall food delivery market hit a rough patch.

The food technology sector, which saw a rush of early-stage funds over the past year, is in the midst of a major restructuring, resulting in hundreds of job cuts. Zomato and TinyOwl together fired more than 500 people and have been scaling down operations. Gurgaon-based Zomato recently stopped taking online food orders in four Indian cities.

Foodpanda India, which is run by Pisces eServices, reported a loss of Rs 36 crore in March 2015 over a revenue of close to Rs 5 crore, according to data from the Registrar of Companies (RoC) at the ministry of corporate affairs.

Foodpanda claims to have over 12,000 restaurants on its platform across 200 cities in India. While Zomato claims to be clocking 50,000 transactions per day, Swiggy says it is facilitating about 20,000 transactions and TinyOwl registers 5,000-6,000 orders per day after it shut operations in four cities.

Foodpanda India claimed its orders have risen by 10 times in last year while industry estimates say it facilitates about 25,000 orders a day.

According to media reports, Rocket's other portfolio companies such as FabFurnish and PrintVenue are also on the verge of shutting down if they fail to get a buyer by the end of this fiscal.

Foodpanda's top leadership team in India also saw a major churn when its co-founder Rohit Chadda, who helped set up its Indian services, stepped down as MD in August last year. The other two co-founders, Amit Kohli and Akhilesh Bali, have also moved on to other ventures.